According to ESPN.com's Michael Smith, the deal is worth $6.2 million plus performance incentives.
Carr was released by the Texans after Houston acquired Matt Schaub in a trade with Atlanta earlier this offseason. The first player selected overall in the 2002 draft, Carr will serve as the backup to Panthers starter Jake Delhomme, who is coming off an uneven 2006 season.
"It's a case where we were obviously looking for someone to come in [and] back up Jake and the opportunity to get a quarterback the caliber of David in free agency is unique," Panthers general
manager Marty Hurney told The Associated Press. "We thought it was a good situation and a good opportunity for us."
Carolina coach John Fox reiterated during the Panthers' courtship of Carr that Delhomme is the unchallenged starter, but the addition of Carr certainly provides an interesting alternative if the incumbent struggles as he did a year ago.
Carr, 27, chose the opportunity with the Panthers over one in Seattle. He visited with Carolina coaches and team officials on Monday and Tuesday, then made a two-day trip to meet with the Seahawks, where he would have also been a backup. After returning from the Seattle visit, Carr counseled with his wife and opted for the deal with Carolina.
"We made it clear and he knows that Jake Delhomme is our starting quarterback," Hurney said to the AP. "I think it was important for him to come to a winning organization and a place where he thinks
has a chance to win. He knows that Jake is our starter. Every player wants to play, but he knows the role he's coming into."
Obviously, the deal with Carolina represents a step back for Carr in his career, but most NFL experts believe the former Fresno State star still possesses immense talent and sorely needed a change of scenery.
In five seasons with the Texans, he completed 1,243 of 2,070 passes for 13,391 yards, with 59 touchdown passes and 65 interceptions, and a passer rating of 75.3. But Carr was the most-sacked quarterback in the league during his tenure with the Texans. Playing behind one of the league's most porous offensive lines, he was sacked a remarkable 249 times.
Carr started 75 games but recorded just a 22-53 record. Between bonuses and base salaries, the Texans paid Carr more than $35 million in five seasons. When they acquired Schaub, whom they immediately named the starter, they initially hoped to be able to trade Carr, but instead released him rather than prolong his time with the franchise.
The move also means the Panthers now have the top two picks from the 2002 draft. Carolina selected defensive end Julius Peppers with No. 2 pick.
Len Pasquarelli is a senior writer for ESPN.com. Information from The Associated Press was used in this report.